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Proactive customer engagement. It’s a tenet of Customer Success. We all do it to some extent – some of us better than others. The question is “How do you best go about structuring that proactive engagement so that you can scale a team and provide a consistently great customer experience?” The answer is “With a good Customer Engagement Model.”

A good Customer Engagement Model needs to be flexible in two key ways:

It needs to accommodate different phases of the customer lifecycle; and

It needs to support both scheduled and unscheduled interactions with customers

In a prior article on Time to Value, I pointed out that it’s critical to keep momentum going once the initial sales deal is closed and ensure that you aren’t diverging from your customer’s original path to reaching their objectives. Your Customer Engagement Model should, therefore, start at the time of sale in order to maintain momentum and achieve a first “quick win”.

Good Customer Engagement Models should also help keep you focused on answering the three key questions you need to know about every customer:

How is our customer measuring value?

Are they achieving that value?

Are we providing an experience that will result in loyalty and advocacy?

Irrespective of whether your company provides high personal touch Customer Success or whether your Customer Success model is more self-service, your proactive engagement with customers should be governed by an Engagement Model. A good Engagement Model helps you understand: A) what the engagement “moments” are for customers throughout their lifecycle; B) who in your organization is responsible for interaction with customers at those moments; and C) what the objective or expected outcome is for each of those moments.

I’ve illustrated what that model looks like conceptually in the image below:

The Phases:

The first key point of an engagement model is that it needs to work across two very different phases of the customer lifecycle, the Onboarding Phase and the Ongoing Usage Phase. The first phase, onboarding, is the much higher intensity, much more critical, and much more interactive of the two. I think of these two phases very much like the takeoff phase and the cruise phase of airplane flight. In the takeoff phase you’re in close proximity to the ground, there’s quite a bit at stake, it’s the phase where more incidents happen, and it generally requires a high degree of pilot focus. During the cruise phase of flight, it’s important that pilots monitor their instruments, ensure they’re on course, and pay attention to external factors. They can’t ignore that they’re flying an airplane during the cruise phase; however the workload, intensity, and immediate consequences are lower than during the take off phase. Pilot’s don’t need to give the airplane nearly as much of their attention during cruise as they do when they’re screaming down the runway, getting it airborne, dealing with heavy air traffic, and monitoring for even the slightest anomaly – which could have dire consequences if left unchecked. During cruise, a pilot can leave the cockpit to use the restroom. During takeoff, on the other hand… not so much.

The Onboarding Phase:

The Onboarding Phase serves two purposes:

It ensures that your customers are getting off on the right foot and are set up for success with your solution; and

It creates a logical opportunity for both you and your customer to think about, articulate, and agree on how you’re going to measure value in the ongoing phase.

In a “high-touch” customer engagement scenario, much of the onboarding phase may be done by a CSM or someone from the customer onboarding or training team. The customer needs to become familiar with your solution during this phase, and you need to ensure that they’re able to be self-sufficient when using it.

A “low-touch” customer engagement scenario will have the same objective, but will achieve it more with automated marketing/email campaigns, automated measurement and exception handling of early adoption indicators, and automated training for the customer.

In both the high and low touch models, it’s critical to measure early indicators of user adoption and determine what course corrections need to be applied. The method for measuring the indicators and for communicating to customers needs to be much more automated in the case of a low touch engagement model.

In addition to ensuring adoption and self-sufficiency, the onboarding phase in a high touch B2B/Enterprise Solution world provides an opportunity for you to validate key assumptions with your customer on how they are going to measure value and how they’re going to quantify the success of their implementation of your solution. If your sales process is value based, you have probably already begun identifying use cases, measurements, and customer ROI expectations. You may very well have also quantified the expected ROI from adoption of your solution. The bad news is that too many companies don’t do any further measurement once the deal is closed. A good onboarding process not only ensures that a customer is adopting your product but positions you as a partner to help ensure they’re making progress against their stated objective.

Example Engagement Moments during the Onboarding Phase (some of which are included in the sample model above) include:

A kickoff meeting to ensure that the customer meets your team (either virtually or face to face, as appropriate)

Confirmation that the customer has dowloaded / activated / or logged in

Initial Product Training

A formal review of the first set of metrics delivered by your solution. These should provide an indication of the customers adoption, usage, and effectiveness (how well they are doing x, not just that they are doing x).

A checkpoint with the customer to ensure that they understand how the product works and that they feel self-sufficient

In the spirit of Time to Value, it’s vital during the onboarding phase that the process moves as quickly and efficiently as possible and that customer momentum is maintained in the process. I’d strongly recommend two things to manage momentum:

Once you have defined your Engagement Moments, measure the time that it takes each customer to progress from one to the other. Analyze your metrics and determine whether there are any systemic delays in any of your phases of onboarding and work quickly to get to root cause. I’ve had teams shave weeks off of implementation/onboarding by measuring individual phases, identifying root cause for the delays, and then fixing the process.

Set escalation triggers if you don’t see adoption events occurring with your customers according to expected timeframes during the onboarding phase. If your customers haven’t created x accounts in y weeks for example, that should trigger proactive engagement on your part – in addition to the predefined moments in your plan.

The Ongoing Phase

The focus of the Ongoing phase is to ensure that your customer is achieving the objectives identified in the Onboarding phase and that you’re keeping a pulse on their experience.

Engagement Moments in this phase can be categorized into one of two types: 1) Time-based; or 2) Event-based.

Time-based Moments

Time-based moments are ones that you can put on a calendar, such as a Quarterly Business Review, Monthly Metrics Review, Annual Account Review, or even Weekly Meetings for your highest of high-touch customers. Time-based moments are great ways to keep your customers interacting with you for the duration of the lifecycle – as long as you clearly set expectations and provide valuable feedback to them during those engagement points. If you aren’t continuously providing value to your customers during these moments, they’ll lose interest and stop attending regular calls/meetings, so be careful not to over-schedule them, and be sure to provide relevant engaging content in each of these engagements. Dan Steinman from Gainsight recently wrote an informative blog post characterizing a good Quarterly/Executive business review.

Event-based moments are ones that are triggered by the occurrence of an event (or non-event in some cases), such as a customer logging a high-severity case with your Support Desk; a new product release from your company; a change in leadership or executive sponsorship at your customer; a poor or mediocre survey response; an absence of support cases over a defined period of time; a decrease in overall usage; or a decrease in key usage metrics from a given customer. The purpose of event-based triggers is to help you react quickly and appropriately to events that can influence the health of the customer relationship – for better or for worse. In either case, the sooner your team reacts to the event that triggered the engagement, the better off you’ll be.

Customer Engagement Models are unique to companies, products, and customer types. An Engagement Model for an enterprise customer with a highly complex solution will look very different than one for a consumer with an off-the-shelf SaaS offering and both will engage different parts of the organization. Logically breaking down that model into two key phases (Onboarding and Ongoing) and defining the Ongoing phase in a way that supports both Time and Event-based moments of engagement with customers should help you optimize for your products and customer types. You will likely end up with more than one engagement model for different customer segments.

Have you employed a Customer Engagement Model and what methods or tools have you used to ensure that the model is consistently applied across your customer base?

Whether you’re facing explosive growth or trying to manage your Cost of Services as you build out your customer facing organization, you know that you are going to be faced with real-world resource constraints as you fund and build a Customer Success function. And after all, you’re a responsible leader and this is 2013, so you know better than to just throw people at a problem. So how do you efficiently manage growth in a Customer Success organization while effectively empowering your customers?

In my last post, A Practical View of Your Customers, I introduced an approach for understanding and mapping your customers by revenue using a Pareto chart. While I focused that article on how to look at your customer segments based on revenue, I’d like to focus this article on where to draw the line for each segment and why. If you haven’t read the previous post yet, I’d suggest doing so now. If you’re familiar with Pareto principles, my prior post certainly isn’t rocket science. You may still want to read it, though, as I’ll be re-using a chart I introduced there to illustrate my points.

Customer Segmentation and Engagement Models

The First, High-Touch Segment

Unless your company is a rare blue unicorn and you have a completely homogeneous customer base, you’re going to have some distribution of current and potential revenue across that customer base. Creating a Pareto Chart will show you which of your customers make up the largest revenue contribution. While my hypothetical (but not uncommon) example in my previous post showed a top tier segment where 10% of the customers accounted for 45% of the revenue, your results may differ – possibly significantly. It is almost certain, however, that a minority of your customers will account for a majority of your revenue and very likely that a small tier will account for a significant percentage (greater than 30%). If this is the case, you have a great opportunity to create a premium service offering via Customer Success that will focus on retaining and growing those customers.

This tier of customers is incredibly valuable. You can afford to (and need to) provide them with some attention, and ensure that you have great two-way communication in place in order to both guide them as well as learn from them. If you’re in the early stages of building your Customer Success team, I’d suggest this first cut at determining how to build out this team:

Think about the key activities that are required to ensure your top tier customers are getting value from your product

Understand how much of a person’s time it will take to provide those activities

Multiply that time by the number of customers you have in your top tier, and then staff accordingly, understanding that your CSMs will likely be able to spend less than 100% of their time on the activities you just defined

Note that this is a bit of an iterative process, and you’ll be doing a few “reality checks” as you understand how much time is needed for your customers – and as a consequence, how many people will be needed to deliver the experience you want your customers to have. There truly is a combination of art and science to this process, and if you can’t afford to hire enough resources to adequately service the group you’ve identified as your top tier, then you have three options:

You can redefine and reduce the size of that tier then only expand it once you can adequately staff to support a larger number of top-tier customers;

You can redefine (reduce) the level of service you provide to your top-tier customers; or

You can introduce automation (customer success automation, marketing automation) to assist the CSM in managing the customer relationship

How much service and effort you provide to each customer is going to be specific to your offering. Once you’ve done your calculations, you’ll likely want to perform a reality check based on the Book of Business each CSM is projected to be responsible for. I’ve seen organizations where each CSM has a Book of Business of as little as $1M of annual recurring revenue and others where that number is closer to $10M… or more. Metrics and “standards” are still all over the map on this topic and are really dependent upon your industry and the level of service you need to provide to your customers. Early stage, highly-technical solutions will require more CSM effort than later stage “commodity” solutions. Whatever stage or solution you’re at, though, be sure that you’re creating a role that is going to be sufficiently engaged to help your customers achieve value.

A Second, Hybrid Segment (Optional, but likely)

Depending on your customer distribution, you may want to define a second segment of customers who still represent significant revenue, but are probably closer to a 1:1 ratio of percentage of customers to percentage of revenue. In the hypothetical example I provide, the second customer segment represents 20% of the customers and 30% of the revenue. Again, your mileage may vary; however if you have a second tier of customers that makes up a sizeable percentage of your revenue, then you can (and probably should) identify a less intensive, but still personal, level of relationship with them (perhaps less frequent interaction than tier one and perhaps assisted even further by marketing automation). By doing this, you now have created personal relationships with two segments of customers that likely cover a majority of your revenue, but only a relatively small minority of your customers. My example in the last post shows 30% of customers representing 75% of revenue. While my example data is hypothetical, I’ve seen a number of companies within +/- 10% of these ratios, especially in the B2B space.

So how many CSMs should you assign to this space?

A good reality check for the number of CSMs to assign to this group is to use your Book of Business per CSM as the great equalizer. You may have CSMs in group 1 covering 10-15 customers and $3M in ARR. In Group 2, with smaller customers , a CSM might need to manage 50-75 customers to cover $3M in ARR. Automation will play a key role here to help identify customers in need, customers at risk, and to trigger targeted communications to customers at the right time.

The Third, Highly Automated Segment

While you’ve likely covered a majority of your revenue base in the first two segments, you still have a long tail (actually a very long tail in cases like freemium) of customers who are using your services but – at least for the time being – provide you with very little revenue. This customer segment is certainly important, both from a numbers, lead generation, and future revenue perspective; however you can’t afford to provide them with the same level of service you provide to customers who are paying orders of magnitude more than they are per month, so what does automation for this segment look like?

Whether this long tail represents 300 or 300,000 customers, you’re going to benefit greatly from an automation solution (or solutions) that help you:

Identify customer usage patterns

Identify at-risk customers

Send appropriate communications to those customers based on behavior, triggers, or their lifecycle

Keep your entire customer base engaged by helping you connect with them in a relevant way

While the long tail doesn’t represent a majority of your revenue, both this segment and your second segment are going to contain customers who represent incredible upsell opportunities – if you do some analysis that will help identify them. If you spend the extra effort up front, you can also leverage marketing automation to target relevant messages to those customers based on their behavior, activity, and other usage metrics.

If your strategy is to land and expand, you’ll need to look everywhere for the expansion opportunities, not just in the top tier. And if you’re using analytics, segmentation and automation appropriately, you can drive meaningful action with the right customers, whether they’re in your “top” tier or in your long tail.